ENGINEERING ECONOMY FIFTEENTH EDITION Solutions Manual WILLIAM G SULLIVAN Virginia Polytechnic Institute and State University ELIN M WICKS Wicks and Associates, L.L.P C PATRICK KOELLING Virginia Polytechnic Institute and State University © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 Solutions to Chapter Problems A Note To Instructors: Because of volatile energy prices in today's world, the instructor is encouraged to vary energy prices in affected problems (e.g the price of a gallon of gasoline) plus and minus 50 percent and ask students to determine whether this range of prices changes the recommendation in the problem This should make for stimulating inclass discussion of the results 1-1 Because each pound of CO2 has a penalty of $0.20, Savings = (15 gallons $0.10/gallon) (8 lb)($0.20/lb) = $1.34 If Stan can drive his car for less than $1.34/8 = $0.1675 per mile, he should make the trip The cost of gasoline only for the trip is (8 miles 25 miles/gallon)($3.00/gallon) = $0.96, but other costs of driving, such as insurance, maintenance, and depreciation, may also influence Stan’s decision What is the cost of an accident, should Stan have one during his weekly trip to purchase less expensive gasoline? If Stan makes the trip weekly for a year, should this influence his decision? © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-2 Other information needed includes total number of miles driven each year and the gas consumption (miles per gallon) of the average delivery vehicle © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-3 Some non-monetary factors (attributes) that might be important are: Safety Reliability (from the viewpoint of user service) Quality in terms of consumer expectations Aesthetics (how it looks, and so on) Patent considerations © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-4 At first glance, Tyler’s options seem to be: (1) immediately pay $803 to the owner of the other person’s car or (2) submit a claim to the insurance company If Tyler keeps his Nissan for five more years (an assumption), the cost of option is ($803 − $500) + $60 × years = $603 This amount is less than paying $803 out-of-pocket, so Tyler probably should have submitted an insurance claim But if his premiums go higher and higher each subsequent year (another assumption!), Tyler ought to pursue option What we don’t know in this problem is the age and condition of the other person’s car If we assume it’s a clunker, another option for Tyler is to offer to buy the other person’s car and fix it himself and then sell it over the internet Or Tyler could donate the unrepaired (or repaired) car to his favorite charity © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-5 (a) 15,000 miles per year / 25 mpg = 600 gallons per year of E20 Savings = 600 gallons per year ($3.00 − $2.55) = $270 per year (b) Gasoline saved = 0.20 (600 gal/yr)(1,000,000 people) = 120 million gallons per year © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-6 The environmental impact on the villagers is unknown, but their spring and summer crop yields could be affected by more than normal snow melt Let's assume this cost is $10 million Then the total cost of the plan is $6 million (180 million rubles) plus $10 million and the plan is no longer cost-effective when this additional externality is considered © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-7 There are numerous other options including a nuclear plant, a 100% gas-fired plant and a windmill bank at a nearby mountain pass Also, solar farms are becoming more cost competitive nowadays © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-8 Increased lifetime earnings of a college graduate = $1,200,000(0.75) = $900,000 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 1-9 Strategy 1: Change oil every 3,000 miles Cost = (15,000/3,000)($30) = $150 / year Strategy 2: Change oil every 5,000 miles Cost = (15,000/5,000)($30) = $90 / year Savings = $60 per year © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-6 (a) Dominance I vs Retain II vs III III vs Retain Reduction in throughput time Vendor I I vs III vs Vendor II Better Worse Better Worse Better Flexibility Worse Worse Better Equal Better Reliability Better Better Better Equal Better Quality Worse Worse Better Equal Better Cost of System Better Worse Worse Worse Worse Dominance? No No No Yes No Attribute Vendor II is removed from consideration (b) Satisficing Attribute Reduction in throughput time Flexibility Reliability Quality Cost of System “Worst” Acceptable Value 50% Good Good Good $350,000 Unacceptable Alternative Retain Retain Retain Retain None Remove “Retain Existing System” from consideration (c) Disjunctive Resolution All alternatives still available (“Retain” already eliminated) pass because all options are acceptable in at least one attribute (d) Lexicography Attribute Reduction in throughput time Flexibility Reliability Quality Cost of System Number of times “greater” 2 Alternative Ranking III > I > II II = III > I I > II = III II = III > I I > III > II Select Vendor III 767 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-7 Left to student 768 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-8 (a) Dominance: Paired Comparison Attribute A vs B B vs C A vs C better Worse worse worse better better * Worse worse better worse better better worse better better Dominance? no no no No alternatives can be eliminated based on the dominance method *Assume that knowing the safety value is better than any unknown value Satisficing: Attribute Feasible Range $80,000 - $100,000 Fair - Excellent Good - Excellent 94 - 99% Fair - Excellent Unacceptable Alternatives none none Alternative A has unknown value * none none *if the same assumption is used (as in the dominance model) alternative A would be eliminated using the satisficing model Lexicography: Paired comparisons - using given weighting: > > > > Attribute ** Ordinal Ranking ** Ranking C>A>B B>A>C C>B>A B>A>C B>A=C is most important rank The selection, based on highest ranked attribute (#5), would be Alternative B Because all alternatives meet at least one acceptability range, no alternatives are rejected 769 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-8 (a) continued Non-dimensional scaling Attribute Value $100,000 $140,000 $180,000 Excellent Good Fair Excellent Good Not known 99% 98% 94% Excellent Good Attribute Rating Procedure ($180,000-Cost)/$80,000 Relative rank - Relative rank - Reliability % - 94 99-94 Relative rank - Dimensionless Value 1.0 0.5 0.0 1.0 0.5 0.0 1.0 0.5 0.0 1.0 0.8 0.0 1.0 0.0 Non-Dimensional Value A B C 0.5 0.0 1.0 0.5 1.0 0.0 0.0 0.5 1.0 0.8 1.0 0.0 0.0 1.0 0.0 Additive Weighting (using given weights) Attribute Initial Cost Maintenance Safety Reliability Prod Quality Weight 0.25 0.10 0.15 0.20 0.30 A 0.5(0.25)=0.125 0.5(0.10)=0.05 0.0(0.15)=0.00 0.8(0.20)=0.16 0.0(0.30)=0.00 B 0.0(0.25)=0 1.0(0.10)=0.1 0.5(0.15)=0.075 1.0(0.20)=0.2 1.0(0.30)=0.3 C 1.0(0.25)=0.25 0.0(0.10)=0.0 1.0(0.15)=0.15 0.0(0.20)=0.0 0.0(0.30)=0 Using Additive Weighting Alternative B would be selected (b) If two (or more) attributes are dependent, including them in the analysis will result in the same ranking of alternatives for these attributes, essentially double (or triple, or more) counting those decision elements This can be a false representation of the decision maker's true attitudes When attributes are entirely dependent, they are more appropriately modeled as a single attribute and weighted appropriately (note that in these cases, the weight of these combined attributes may not necessarily be the sum of the individual weights of the original attributes) Once this is accomplished, the decision analysis proceeds as in part (a) 770 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-9 (a) Attribute Social Climate Starting Salary Career Adv Weather/Sports Relative Rank 1.00 0.50 0.33 0.25 2.08 Normalized Rank 1/2.08 = 0.481 0.5/2.08 = 0.240 0.33/2.08 = 0.159 0.25/2.08 = 0.120 1.00 (b) Alternatives Attribute Starting Salary Apex (N.Y.) $35,000 Sycon (L.A.) $30,000 Sigma (GA.) $34,500 Mc-Graw-Wesley (AZ.) $31,500 1.0 0.0 0.9 0.3 Dimensionless Equivalent (DE) DE = Worst Outcome - Outcome Being Made Dimensionless Worst Outcome - Best Outcome (c) Attribute Normalized Apex Weight Sycon Sigma Mc-Graw Wesley Social Climate 0.48 1x0.48 1x0.48 0.5x0.48 0x0.48 Starting Salary 0.24 1x0.24 1x0.24 0.9x0.24 0.3x0.25 Career Adv 0.16 0x0.16 0x0.16 0.6x0.16 1x0.16 0.12 0x0.12 0x0.12 0.33x0.12 0.67x0.12 Sum 0.72 0.63 0.59 0.31 Weather/ Sports Using lexicography we conclude that social climate is the most important attribute and Apex is selected Additive weighting also selects Apex 771 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-10 (a) Wright dominates Alott – Alott is removed from further consideration (b) Only Wright meets the minimum performance levels for all attributes (c) All candidates would be retained under disjunctive resolution (d) Lexicography – Based on project management skills (most important attribute), Busy is eliminated Looking next at general attitude, Surley is eliminated Lastly, looking at years manufacturing experience, Wright would be selected 772 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-11 Left to student 773 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-12 (a) (b) Left to student – no unique answer Select a mathematical model similar to additive weighting Let each judge set his/her own weightings and develop a score for each contestant Then, sum the three scores for each contestant The contestant with the highest total score is the winner This method will allow each judge to be as subjective about each attribute as he/she desires while making the final selection objective 774 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-13 Assume all attributes are of equal importance Attribute Total years Manufacturing years Project management skills Management years General attitude Total Score Alott 0.33 0.33 1.00 0.00 1.00 2.66 Surley 0.00 1.00 1.00 0.50 0.00 2.50 Busy 1.00 0.00 0.00 0.50 0.50 2.00 Wright 0.67 0.67 1.00 1.00 1.00 4.34 Wright would be selected 775 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-14 i Wi 1.0 ? 0.8 0.7 Rank ? By inspection, Ranki=4=3 10 n Vj WiX ij i1 V2 = 2.3 = (1.0) (0.7) + W2 (1.0) + (0.8) (0.5) + (0.7) (1.0) 2.3 = W2 + 0.7 + 0.4 + 0.7 W2 = 0.50 V1 = 2.69 = (1.0) (1.0) + (0.5) (0.8) + (0.8) X3,1 + (0.7) (0.7) 2.69 = 1.0 + 0.4 + 0.8 X3,1 + 0.49 X3,1 = 2.69 - 1.0 - 0.4 - 0.49 = 1.0 0.8 Vj normalized = V1 = 2.69/2.69 = 1.00 V2 = 2.30/2.69 = 0.86 By inspection Rankj=1 = 2.0 Rankj=2 = 1.0 Filling in blanks, i Wi 1.0 0.5 0.8 0.7 Rank 776 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-4 continued Keep Existing Tool Purchase new machine Tool Rank X1j 2.0 1.0 1.0 0.7 Rank X2j 2.0 0.8 1.0 1.0 Rank X3j 1.0 1.0 2.0 0.5 Rank X4j 2.0 0.7 1.0 1.0 Vj Vj norm 2.69 1.0 2.30 0.86 777 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-15 Left to student 778 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-16 Left to student 779 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 14-17 Left to student 780 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 Solutions to Spreadsheet Exercises 14-18 10 11 12 13 14 15 16 17 18 19 20 A Attribute Cost Anesthesia Distance Office Hours Quality B Dr Molar $ 50 Novocaine 15 40 Excellent Quality Excellent Fair Good Poor Attribute Cost Anesthesia Distance Hours Quality Sum = C Dr Feelgood $ 80 Acupuncture 20 25 Fair D Dr Whoops $ 20 Hypnosis 40 Poor E Dr Pepper $ 40 Laughing Gas 30 40 Good Anesthesia Acupuncture Hypnosis Laughing Gas Novocaine Dr Molar Dr Feelgood Dr Whoops 0.50 0.00 1.00 0.67 0.00 1.00 0.60 0.40 1.00 1.00 0.00 1.00 1.00 0.33 0.00 3.77 0.73 4.00 ^ best choice F G Dr Pepper 0.67 0.33 0.00 1.00 0.67 2.67 21 22 23 24 With novocaine rated as the preferred method of anesthesia, Dr Whoops becomes 25 the dentist of choice 781 © 2012 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved This publication is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458 ... companies by having a new technology (machine); etc (g) Post Audit: Did either machine (or outsourcing) fail to deliver high quality product on time? Were maintenance costs of the machines acceptable?... time may be extremely important to your choice Dynamics of group decision making may also introduce various “political” considerations into the final selection (can you name a couple?) Principle... or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise For information regarding permission(s), write to: Rights and Permissions Department, Pearson